THE chief executive of Royal Bank of Scotland has admitted many bankers were paid too much during the financial boom years and he is now keen to make sure wages are "deserved".

Stephen Hester, who earns £1.2 million but waived his near-£1m bonus for last year, said he was keen for remuneration to be linked to things that are "valuable" in the long term.

Mr Hester, who is meeting RBS customers in Scotland, accepts the controversy over bonuses and pay packages in the financial sector is unlikely to go away.

However, he hopes people will start to accept that "people working hard

deserve encouragement" to succeed.

Mr Hester, who declined his bonus after an IT glitch left customers unable to access their accounts, said: "To an extent there is always a noise in society about how the cake is divided up and I don't think we single- handedly will be able to change that noise. I hope we spend more of our time trying to enlarge the size of the cake for everyone, rather than squabbling about how to divide it up.

"In our case the most important thing is to get to the point that people accept a good job is being done at RBS.

"The banking industry as a whole needs to make a better connection between what people get paid and what they do.

"In some cases that means people getting paid less. I think it is true that there were bits of the banking industry where pay was too high for what was being delivered, especially when we now look and see that what was being delivered was maybe a bit inflated.

"Pay in some areas is coming down but my point is less about pay going up or down. Pay should be deserved. It should be linked to things that people do, and those things they do should be valuable and lasting."

Mr Hester said RBS would not get involved in debates over Scotland's constitutional future, but he believes voters need more information from both sides of the debate. He added: "What we must make sure is that we can adapt to the environment the political discussion produces."